Daily Newsletter, Wednesday, 01/30/2008

Table of Contents

Market Wrap

Rubber Bullets

by Keene H. Little

Maybe a Taser Gun would work better against the bears. They're selling them
to women now for personal protection so I'm thinking the Fed should buy a couple
and use them on the bears which won't go away. The Fed is down to rubber bullets
now and they're not very effective.

Unless you were sleeping under a rock today, or just someone who completely
ignores the news (I don't blame you), you know that the Fed lowered the Fed
funds rate another .50 to 3.0% now (and lowered the discount rate by the same
.50). This should help mortgage holders, or those wishing to get a mortgage
since the move will lower interest rates, right?

Well, maybe not. The LIBOR rate (London Interbank Offered Rate, the overnight
rate banks charge each other for borrowed money) has come down a little since
the central banks have cooperated in pumping massive amounts of liquidity into
the monetary system (in an effort to re-inflate, the same way they got us into
this mess to begin with). But the LIBOR, which is used by many ARMs (adjustable
rate mortgages) for their resets, has remained stubbornly high--the 1-month rate
was around
5.3% last summer and today it is 4.6%.

The 10-year yield (TNX), also used by many banks to set mortgage rates, has come
down significantly since last year, dropping from over 5% to a low of 3.3% this
month. But last week's low on January 23rd, the day of the historical Fed cut of
0.75%, has since reversed hard as bonds got sold last week and continued to get
sold this week. The current rate is a little over 3.7%, up about 0.5% from last
week's low.

Before continuing, I wanted to show an updated chart of the 10-year yield:

10-year Yield (TNX.X), Daily

The bounce off last week's low should have more to go. A 38% retracement of the
decline from last June would have TNX at 4.0% while a 50% retracement would be
4.3%. That higher level is also the bounce high in December and would be a
typical retracement level from an EW perspective. As depicted, this could play
out into March before rates are ready to head south again.

So while the Fed has aggressively cut 1.25% in the last week to 3.0%, the
10-year yield has bounced 0.5% to 3.73%. Therefore if the Fed is aggressively
cutting rates to help the mortgage market, it's backfiring on them. The bond
market is saying loud and clear that they're concerned about the inflationary
effect of the Fed's aggressive cuts. The US dollar and gold market are saying
the same thing. Sooner or later the Fed will be forced to turn around and face
the music (the inflation
monster that they're going to create).

But what the Fed is most worried about is a meltdown in the financial markets.
Home buyers/owners? The Fed's response: "Sorry, if you're in trouble, we wish
you well. We've got more important people to worry about, like our banking
buddies." That's a little harsh I know, but the Fed is clearly panicked by what
they see happening and the late-day selloff in the stock market (after a
manufactured post-FOMC rally, thank you PPT) shows that stock market
participants are getting
a whiff of that fear.

As discussed by Jim in the past week, the bond insurers are in serious trouble.
As they get downgraded, which will happen more quickly from here, the bonds
they've insured will get downgraded as well. I've said many times in the last
year that the subprime problem is the tip of the iceberg and that the collapse
of the credit bubble will completely wipe out the gains created by that bubble.
We're witnessing it starting to unravel now.

The billions of dollars written off so far by the major banks is just the start
and many will soon have serious problems finding willing partners, Sovereign
Foreign Funds or not, who will belly up to the bar with them and invest hundreds
of billions more in the bank. The banks will be writing off probably at least
quadruple what they've written off so far. I'm sure we'll see some high-profile
bank failures and buyouts. The Federal government could be forced to prop up a
big bank or
two (like they did with Chrysler but on a much bigger scale) before
all is said and done. Or they might assist in the joining of two banks to pool
assets. That's obviously speculation on my part but I think the problem will
turn very serious for the banking industry within the next year, potentially
much faster than that. Do you know where your money is?

And that brings us back to the Fed. I'm not the only one who sees these bond
downgrades and massive write-offs coming. The banks are going to be hugely
under-capitalized by the time they take further write-downs and sock more money
away into their reserve accounts for losses. I mentioned last year that banks
were carrying record low amounts in reserve accounts for potential losses.

We will show you how you can make $2,000 in cash each month using your existing portfolio equity as collateral. This low-risk strategy works no matter which direction the market goes. Best of all, it is easy to implement and no previous experience with options is necessary.

The banking executives and regulators were so confident that the good times
would continue, even though the banks were taking extraordinary risks (like
never before in the history of the banking industry), that they pulled their
reserve accounts down to record low levels so that they could count every penny
earned and jack up their share price. And for this, and the hundreds of billions
of dollars flushed down the toilet, the fired CEOs left with hundreds of
millions in severance while
a "rogue trader" gets thrown in jail. But I digress.

The Fed knows the banks are in big trouble. They have to give them every way
possible to make money and reducing their cost of borrowing is about all they
have. But the Fed is rapidly running out of even the rubber bullets and they're
panicking. Expect the stock market to be right behind the Fed.

As for the central banks having the ability to flood the market with money,
especially in the US where we have the ability to create all the money we want
(at the risk of deflating the dollar further and creating more inflation), it
won't work. Whether the Fed lowers interest rates or floods the market with more
money to help the banks lend more (and make more), we still need someone on the
other end who wants the money. The perfect analogy is the one where you can lead
a horse to
water but you can't make him drink.

The Fed can make more money available at a cheaper price but if I'm worried
about my job or already maxed out in loans and credit cards, you can lower rates
to zero and I still can't afford another payment. Japan proved this. But the
stock market has been in another world, thinking that it's different this time
and that it will work for us. The mood has shifted and we're entering a bear
market cycle (within a larger secular bear market cycle) and that's just the way
cycles run. The
poor Fed thinks they have the power to thwart cycles but alas
they're just along for the ride, flailing and gnashing their teeth and tilting
at windmills. Don't fight the Fed? How about don't fight the social mood swings
(which are reflected in the stock market).

GDP and Chain Deflator
For the 4th quarter the U.S. economy slowed more than the expected 1.1%, growing
at only a 0.6% annual rate. This is the weakest growth since 2002 and the end of
the last recession. This was down from 4.9% in the 3rd quarter. Residential
investments fell at the fastest rate in 26 years (1981). We were coming out of a
long bear market back then.

Real personal spending grew at a 2.0% rate, down from the 3% average rate last
year. Thanks to government spending of +2.6%, even with a decline in defense
spending, the GDP number was helped.

Speaking of personal spending, the following chart shows it's been slowing for
quite a while now:

Personal Consumption, 1990-2008, courtesy briefing.com

The line of interest is the red one which shows consumer spending has been in a
steady decline since 2004. I fully expect to see it drop well below the lows
seen back in 2002, and quite possibly below the low in 1991. The amount of
credit being carried by people is absolutely staggering and the credit implosion
will be seen here as well.

ADP Employment
ADP shows the U.S. private sector added 130K jobs in January. Adding about 25K
government jobs makes the total about 155K which is a decent number. Whether the
government's numbers will anywhere close is unknown (Friday's payrolls number is
expected to be around 80K). The service sector added 141K jobs while we lost
another 11K jobs in the manufacturing sector. Guess which one pays more.

Crude Inventories
Crude supplies rose more than expected to 293M barrels, up +3.6M. Gasoline
supplies were also up +3.6M barrels but distillate products dropped by -1.5M
barrels.

FOMC Policy Statement
As already mentioned, the Fed dropped the Fed funds rate another 0.50% for a
total of 1.25% in the past week, now at 3.0%. "Financial markets remain under
considerable stress, and credit has tightened further for some businesses and
households. Moreover, recent information indicates a deepening of the housing
contraction as well as some softening in labor markets. The Committee expects
inflation to moderate in coming quarters, but it will be necessary to continue
to monitor inflation
developments carefully."

The statement that had everyone initially excited was "The Committee will
continue to assess the effects of financial and other developments on economic
prospects and will act in a timely manner as needed to address those risks."

This was an effort by the Fed to let the market know that they're not done and
will continue lowering rates for as long as they feel the need is there. But as
with every rate cut so far (the market is well below where the Fed first started
cutting last September, which are now 2.25% below the starting point of 5.25%),
the market seems to be shrugging off each rate cut announcement faster and
faster now. Fear is replacing greed and rallies are looked at as opportunities
to unload. Will
that continue? Onto the chart:

DOW chart, Daily

Price action has left several possibilities on the charts (from an EW--Elliott
Wave--perspective). I'm only showing two on the DOW chart but I'll show a couple
of others on the other indices, including a more immediately bearish one on the
RUT's chart.

The dark red wave count shows a triangle consolidation pattern playing out in
the month of February. We'd see lots of chop and whipsaws if this happens so
trade carefully and be reluctant to hold onto trades--take profits often if in a
winning trade. Then price would continue lower out of the triangle and head for
new lows in March.

The pink wave count is looking for a little higher, maybe, and then a pullback
before heading higher again in February. If the DOW makes it above 12724, the
wave (1) low in November, then the dark red wave count gets negated, hence the
key level (pink target symbol) there.

DOW chart, 60-min

This afternoon's reversal left a bearish candlestick pattern on the 60-min chart
and I expect to see follow through to the downside on Thursday. A drop below
12115 would negate the pink wave count so that's the key level to the downside
right now. Otherwise we could see a pullback before continuing higher again to
the 12800 area.

SPX chart, Daily

The SPX daily chart is messier looking because I tried to add one other scenario
that's not on the DOW chart--a break from here to below last week's low near
1274 (in grey). I show a stair-step move lower in February but a more bearish
possibility is that we could be set up for a 3rd of a 3rd wave down. The wave
count is not important for those who don't follow the counts but understand that
that setup is for a very hard selloff next month. If last week's lows in the
market break,
the risk is for a strong selloff that will make the
December-January selloff look mild. In light of the news coming out about
downgrades in the bond insurers and what impact that will have on the major
banks, I do not for one minute underestimate this possibility.

But like the DOW we could see price chop up and down for a month (dark red), or
bounce a little higher (pink), before the next leg down.

SPX chart, 60-min

Again, it looks like a key reversal this afternoon and strongly suggests lower
prices tomorrow. Futures are down pretty hard tonight but I have no idea what it
will look like in the morning. I wouldn't be surprised if the PPT steps in in
the early morning hours and tries to lift the futures. The key level to the
downside is 1323 which would negate the pink wave count whereas a rally back
above today's high would suggest we'll see at least a rally up the 1400 area.

Nasdaq (COMP) chart, Daily

I'm showing the same possibilities for the COMP as for the DOW and SPX--either a
sideways triangle will play out next month or we could get a whippy bounce that
makes it a little higher into the end of February before turning back down. If
price breaks below last week's low near 2200 then the risk is for a hard decline
as explained for SPX.

Nasdaq (COMP) chart, 60-min

If the bulls (or PPT) can pull a rabbit out of the hat tomorrow and flame the
shorts, a rally back above today's high would likely mean a rally above last
Friday's high near 2407 and it would be off to the races to the upside,
targeting around 2500. But continued selling tomorrow and a drop below Monday's
low near 2307 would likely target the 2230 area for support and a bounce back up
(if the sideways triangle pattern is going to play out, shown on the daily
chart). Much below 2230
and I think the market will be in trouble.

Russell-2000 (RUT) chart, Daily

Instead of showing the possibility for a sideways triangle consolidation into
February I'm showing the possibility that we have an even more immediately
bearish setup (dark red). After the high in December, labeled as wave (2), the
decline from there would be the start of wave (3). The third wave is typically
the strongest and largest wave and therefore the decline to the January low
looks too short to be all of wave (3). This is one of the subjective factors in
EW analysis--it has
to pass the "smell" test. Wave (3) will consist of a 5-wave
move and therefore if the decline into January was only the 1st wave of (3),
then the bounce to today's high was wave 2 of (3) and we could be ready to start
wave 3 of (3). This is potentially significant because a 3rd of a 3rd wave is
usually a powerful move. You don't want to get in the way of these (think
tsunami and you're standing on the beach). It would be a drop much larger and
faster than the drop from late
December to the January low. You get my drift.

So that's the very bearish possibility. Take a break of last week's lows very
seriously. In the meantime we could still see a strong pullback but have it be
only part of a larger sideways triangle or a pullback before heading higher
(pink). Unfortunately, with the wide price swings of late, we don't have too
many close-by levels to tell us which could be playing out. Keep taking profits
when offered and if we get the breakdown you'll have plenty of time to jump
aboard and ride that
wave.

Russell-2000 (RUT) chart, 60-min

A break below 681 would tell us the bounce off last week's low is finished but
we'd be left guessing how deep the pullback will be. I'll be following the move
live on the Market Monitor to offer potential turning points but for longer term
traders it's a bit dicey here. A push from here back above today's high near 716
should have the RUT heading for the 740 area.

BIX banking index, Daily chart

The bounce off the January low could be complete and if so then we're due either
a pullback before heading higher again and breaking its down-channel (green) or
else a drop to a new low in February. I'm showing a downside target near 212
which was the March 2000 low and it's a Fib projection based on the wave counts
to the downside.

If the bullish divergence holds at a new low then it's possible we'll get a much
bigger bounce from that low to correct the decline from last year. That would
indicate that people are feeling the banks have made it through the worst (heard
that one before have you?) and there will be a lot of recommendations to buy the
beaten down banks. The wave pattern supports that view--even though it will only
be good for a few months, there should be a very good trade on the long side
(emphasis
on trade).

U.S. Home Construction Index chart, DJUSHB, Daily

Like the banks I see the need for at least one more decline to finish the wave
count from January 2007, with a downside target near 200 (previous price level
and Fib projections). I'd actually be interested in buying some stronger home
builders down there. They've been sold off so hard that they could be left alone
while sellers turn their attention to the rest of the market. But, I still
prefer cash.

Oil chart, Oil Fund (USO), Daily

There's a potential neckline forming near $68 on USO ($85 for oil's March
contract). If the bounce in MACD is turned back down at or below the zero line
we'll probably see that neckline break. Worry about a global recession (and it
will be global) would have traders pulling bids out of concern that lack of
demand will drop the price of oil. It takes a rally above 79 to confirm oil is
in a potentially large rally that could take it to 100 (not likely in my mind
but let price lead the
way here).

Oil Index chart, Daily

Obviously if oil turns back down and stocks turn back down it could be a double
whammy for oil stocks. The wave pattern is set up for some serious selling as
per the dark red wave count but could get a little higher (pink) before turning
back down. The choppiness of the bounce tells me there's very little chance it
will make it much higher (although I've been fooled by this index more than
once). Any rally back up to underneath its broken up-channel, currently near
830, which would
also be a 62% retracement and near the 50-dma, would likely be
an excellent short play setup. But I'd be surprised if it makes it much higher,
if at all.

Transportation Index chart, TRAN, Daily

The Transports almost made it back up to its downtrend line from July, currently
near 4750 and could still make a last stab up to there (pink) but it's looking
vulnerable to turning back down now. The dark red wave count is set up for a 3rd
of a 3rd wave down and as explained for the RUT, this would be accompanied by
some very strong selling. It takes a break of 4105 to confirm the bearish wave
count and any break below the bottom of its down-channel would be a very bearish
sign.

U.S. Dollar chart, Daily

The US dollar broke below the January 15th low at 75.20 and that negated the
bullish wave count I had on last week's chart. It's still possible there is a
slightly different bullish count (green) but any further drop below the November
low at 74.48 would strongly suggest we'll see at least a move down to the bottom
of its down-channel near 73. The other possibility from here, shown in pink, is
for a triangle consolidation to finish playing out in February-March before
dropping down
to the bottom of its down-channel in April. It now takes a rally
above 77.85 to negate both of those bearish wave counts.

Gold chart, Gold Fund (GLD), Daily

Gold shot higher after the FOMC announcement (as the dollar dropped and euro
rallied) but it came very close to tagging the top of its parallel up-channel
for price action since the August low. The bearish divergence at the new high
suggests it won't hold. A triangle consolidation pattern for the dollar could
see a pullback in gold and then it will be a matter of determining what kind of
pullback it is in order to help determine whether it's a correction (meaning a
continuation higher
after it's done) or impulsive (meaning a likely break of its
uptrend line from August). By this chart I think the upside is risky for gold
and on the Market Monitor I've been attempting to point out potential resistance
levels to set up a short play. The top of its up-channel near 92.70 is a
potential short play setup (about 945 for the April gold contract). If gold
reverses lower tomorrow after this afternoon's spike up, then like the equities
I see lower prices dead ahead.

Results of today's economic reports and tomorrow's reports include the
following:

Tomorrow will be busy for economic reports but now that we're past the FOMC
announcement there will probably be little fretting about what it will mean for
the Fed. Still, any further signs of a slowing in spending, increase in
inflation or a slowing in PMI could cause further anxiousness in an already
anxious market.

SPX chart, Weekly

The weekly oscillators look like they're ready to turn back up but if prices
continue lower then the oscillators will flatten out in oversold--an indication
of a strong trend. As discussed above, particularly with the RUT, if we get
another leg lower directly from here, the drop to below 1200 could happen in
pretty much a straight line down vs. how I've got it depicted and the subsequent
bounces could be much smaller. But we'll have to see how price plays out over
the next week or
two before that kind of move identifies itself.

The bottom line is that the market is very vulnerable right here. If selling
takes hold and the market sells off quickly, breaking last week's lows, you'll
want to be flat or short the market. But until that happens I see a equally
likely possibility that we're in for a very choppy consolidation over the next
month, one that will be marked with lots of volatility and plenty of whipsaws to
frustrate both sides. That's why I suggest taking profits early and often if
you're attempting
to trade short term moves.

If you're looking for longer term plays then you could be challenged. If we get
stuck in a sideways consolidation for the next month then selling spreads will
be the right play. But if the market breaks down then selling bull put spreads
will be disastrous. I don't see a lot of upside but use the upside targets I've
shown on the charts to try to sell call spreads above them.

Directional traders simply have to be more careful right now, and that could
continue to be the watchword for quite a while. Trading in bear markets is very
difficult and as more retail traders try their hands in shorting the market
they've actually made it more difficult for everyone else--they're easily
punched out of their trades and all that short covering spikes the market much
higher but then reverses on a dime once that buying stops. See this afternoon
for a good example.

As for tomorrow, I expect to see follow through selling. If it starts with a gap
down then of course the risk, if you short it, is a gap closure, which could be
a big move. Until Monday's low is taken out understand that any pullback could
be bought quickly, especially if there's a little help from our friends (PPT).
Any push back above today's high should have you looking to buy pullbacks until
the next resistance levels, shown on the charts, are reached. Good luck trading
this--it's
a wild one.

New Plays

New Option Plays

by James Brown

New Calls

None today.

New Puts

Hartford Fincl. - HIG - cls: 78.55 chg: -0.87 stop: 81.75

Why We Like It:
We added HIG to the play list as a put candidate on Sunday but we were a couple
of days early. The stock spike higher and hit our stop loss this afternoon as
the market rallied on the fed news. However, the market, and HIG, reversed again
before the closing bell. This looks like a new entry point for puts. We're
putting the stop loss just above today's high. We have two targets. Our first
target is the $75.15-75.00 range. Our second target is the $71.00-70.00 range.

Why We Like It:
TFX is another candidate from the Sunday newsletter that hit our stop this
afternoon following the fed decision on interest rates. Today's late day bearish
reversal and failed rally under the 50-dma looks like another entry point to try
again. We're suggesting a stop loss at $60.01 but you could try a stop at $59.21
just above today's high. Our target is the $54.00-52.50 zone.

New Strangles

Google - GOOG - close: 548.27 chg: -2.25 stop: n/a

Company Description:
Google's innovative search technologies connect millions of people around the
world with information every day. Founded in 1998 by Stanford Ph.D. students
Larry Page and Sergey Brin, Google today is a top web property in all major
global markets. Google's targeted advertising program provides businesses of all
sizes with measurable results, while enhancing the overall web experience for
users. Google is headquartered in Silicon Valley with offices throughout the
Americas, Europe and
Asia. (source: company press release or website)

Why We Like It:
GOOG is set to report earnings after the closing bell tomorrow, January 31st.
Expectations have come down quite a bit. In addition to market weakness there
have been multiple analyst firms issue cautious or bearish comments about GOOG's
earnings report due tomorrow and this has contributed to the stock's sell-off.
If these analysts are right and GOOG has negative news then the stock could
really crash in this environment. If they're wrong and GOOG really surpasses
expectations or comes
out with some new exciting product then there could be a
big rush higher. Shares closed right near the $550 level, which offers a great
opportunity for a neutral strategy. A straddle is too expensive. Buying both a
$550 call and $550 put would cost $51.50. GOOG would have to move more than $52
and before we came close to making any money. However, if we buy a strangle and
GOOG moves $50, which it could easily do, then we have a greater chance of
making a profit. Our biggest risk
is that GOOG merely bounces around the
$525-575 zone and doesn't see any big directional moves. Fortunately, the stock
has a stronger history of big post-earnings volatility.

Suggested Options:
A strangle involves buying both an out of the money call and an out of the money
put option. It's a neutral strategy. We don't care what direction the equity
moves as long as it moves big. We're suggesting the February options. Our
estimated cost is $17.00. We want to sell if either option hits $27.00 or more.

Play Updates

In Play Updates and Reviews

by James Brown

Call Updates

United States Oil Fund - USO - cls: 73.08 chg: +0.10 stop: 68.59

Oil did not move much today but the short-term trend remains bullish. We do not
see any changes from our previous comments. Looking at the daily chart it
definitely seems like the USO is poised to rally toward $77.50 but we're going
to stick to our target. Our short-term target is the $74.50-75.00 range. More
aggressive traders could easily aim for the $77.50-79.00 region.

Put Updates

Ambac Fincl. - ABK - cls: 10.85 change: -2.08 stop: n/a

ABK erased yesterday's 16% gain with a 16% loss today. Most of the weakness came
in the last hour of trading as investors panicked over news that a rating
downgrade for the bond insurers was imminent. We don't see any changes from our
previous comments and remain bearish on the stock. Our suggestion was for the
May puts. We are labeling this a speculative, higher-risk, lottery-ticket style
of play. Basically we'll either win big or lose the entire bet. We will have to
play it by ear
when it comes to exiting but we're looking for a decline to $5.00
or less.

Entry point alert! Even with the market's post-fed rally shares of HOG couldn't
make it past resistance near $40.00. Today's move looks like a new bearish entry
point for puts. More conservative traders may want to tighten their stops toward
$40.00. We have two targets. Our first target is the $35.25-35.00 range. Our
second, more aggressive target is the $32.50-30.00 zone.

News that a downgrade for the "bond insurers" sent MBI and ABK sharply lower.
The headlines failed to specific which insurers might be downgraded by name but
MBI is one of the key insurers that is barely holding its head above water. We
don't see any changes from our previous comments and believe this company (and
stock) is going down. Don't forget - tomorrow is a big day for MBI when the
company reports earnings before the bell. We're not listing a stop loss. This is
a lottery
ticket play. We'll win big or it's going to go bust. This is one of
the few times that we will hold over earnings. MBI reports earnings on Thursday
morning before the bell. We will have to play it by ear when it comes to exiting
but we're looking for a decline to $5.00 or less.

We do not see any change from our previous comments on PRGO. The rebound in PRGO
looks like it's already running out of gas. We're not suggesting new puts until
we see a failed rally at $32 or a new relative low under $29.70. Our target is
the $25.50-25.00 zone. The P&F chart has turned bearish with a $23 target.

The afternoon rally in RL was a bit anemic and shares have now failed near their
50-dma. This looks like a new bearish entry point to buy puts but more
conservative traders might want to wait for a breakdown under $60.00 first.
We're listing two targets. Our first target is the $55.50-55.00 range. Our
second, more aggressive target is the $52.00-50.00 zone.

Strangle Updates

(What is a strangle? It's when a trader buys an out-of-the-money (OTM) call
and an OTM put on the same stock. The strategy is neutral. You do not care what
direction the stock moves as long as the move is big enough to make your
investment profitable.)

---

DJIA 1/100 Index - $DJX - cls: 124.43 chg: -0.37 stop: n/a

The market's initial reaction to the fed news has been reversed by renewed
concerns over downgrades for the bond insurers. Overall today's session is a
bearish reversal. We are not suggesting new strangle positions at this time but
if you're really quick and the market doesn't gap down you might be able to open
a new position before the market moves too much tomorrow morning. The options we
suggested were the February $127 calls (DJW-BW) and the February $122 puts (DJW-NR).
Our estimated
cost was $3.36. We want to sell if either option hits $4.85 or
more.

Picked on January 29 at $124.80
Change since picked: - 0.37
Earnings Date 00/00/00
Average Daily Volume = million

Dropped Calls

United States Cellular - USM - cls: 70.15 change: -2.31 stop: 67.89

We are suggesting readers hit the eject button in USM and exit now. The stock
under performed the market all day and failed to participate in the afternoon
fed-inspired bounce. We suggest you exit any bullish positions and consider
buying puts on a new relative low under $68.00.

Dropped Puts

Hartford Fin. - HIG - close: 78.55 chg: -0.87 stop: 81.01

The post-fed rally sent shares of HIG past resistance at $80-81 and the stock
hit our stop loss at $81.01. This play is closed but the action today looks
bearish given the late day reversal lower. We're reloading this put play on HIG
so look for it in the new plays section.

MICC spiked toward $108 this afternoon following the fed news. This breakout
over resistance hit our stop loss at $105.35 closing the play. We are not
convinced the stock is headed higher and would keep an eye on it for another
breakdown below $100-99.

The afternoon spike on the fed news was too much and TFX briefly traded to
$59.18 before reversing lower. The stock hit our stop loss at $58.51 closing the
play. However, the move this afternoon looks like another entry point for shorts
so we're going to try again. Look for a new put play on TFX in tonight's new
plays section.

Dropped Strangles

None

Today's Newsletter Notes: Market Wrap by Keene H. Little and all other plays and content by the Option Investor staff.

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